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Telecom prepared to co-exist with rival UFB network

Thursday 30th September 2010

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Telecom is prepared to "co-exist" with a state-funded fibre network after its plans to partner with the government took a knock earlier this month.

Chairman Wayne Boyd and chief executive Paul Reynolds told shareholders in Christchurch the telecommunications company is in good shape to "co-exist" with a government funded rival, though it's open to partnering with rival regional network outfits. Reynolds said the winning bid should be a national one which incorporates the $300 million rural broadband initiative along with the $1.35 billion ultrafast broadband project.

"Should Telecom not be successful in agreeing an appropriate package with your government, your company is well positioned to co-exist with state infrastructure too," Boyd said.

"Working with Telecom will also ensure the entire industry is focused on delivering New Zealand's fibre future as efficiently as possible, rather than having one of the largest private sector investors in competition with state funded infrastructure."

Earlier this month, Telecom's bid took a dent after Crown Fibre Holdings put three regional bids in the box seat to win 18% of the provincial and urban areas. To participate in the roll-out, Telecom's willing to carve out its network business, Chorus, in a structural separation of the company, though the Ministry of Economic Development warns there will still be competition challenges in the network space.

Reynolds reiterated the importance of getting lower regulatory costs in return for carving up the business, and told shareholders the deal will have to make sense to them to win their approval.

Alongside the UFB, Reynolds said the company will be focus on cutting more costs in its retail and Gen-i businesses, targeting big-spending customers by offering "more attractive bundles" and seeking out "growth opportunities."

The meeting lasted a little over an hour with no questions from the floor.

The shares fell 0.5% to $2.07 in trading today.

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